The fourth quarter was another rough one for FirstCash (FCFS), as the combination of pandemic-related restrictions and government stimulus (in the U.S.) continue to pressure demand for the company's high-margin pawn loans. Activity improved less than I'd expected, and the share price performance was likewise underwhelming - improving less than 10% from my prior update on the company.
Wall Street typically discounts business performance improvements, with the shares moving ahead of reported numbers, but the combination of weaker pawn loan originations and cautious (if not negative) guidance have pushed the recovery story out again. FirstCash shares do look undervalued on a long-term basis, but I expect that investors will need more confidence on the pawn loan origination outlook before coming back to the name.
Continue to the full article:
No comments:
Post a Comment